Enhancing performance through employee engagement the MacLeod Review Presentation to the CIPD Scottish Conference, 12 March 2010 Nita Clarke, Director IPA Vice-chair of the Review
The MacLeod Review A report to Government About engagement at all levels About engagement for performance Why timely Enduring reasons Current economic climate Globalisation and competition New world at work Generation Y etc After eight months work, reported 16 July 2009 Follow-up work now underway
What we did Looked at what employee engagement is Does it matter? What stops it happening? How should government promote it? Meetings with leaders, practitioners, companies, unions, academics; >30 consultation events around country and all sectors of the economy; more than 300 online responses
We believe Engagement, going to the heart of the workplace relationship between employee and employer, can be a key to unlocking productivity and to transforming the working lives of many people for whom Monday morning is an especially low part of the week. para 4 introduction
50+ definitions You know it when you see it it s how we do things around here Unlocking people s potential at work Respect for people at it s heart
It s a way of running and managing a company or delivering a service which maximises the input, commitment and voice of employees to maximise the effectiveness, quality and performance of the organisation
What it isn t
Or this
Does it matter? Employee engagement levels correlate with: better financial performance better outcomes in the public sector Other benefits include: higher levels of innovation more employees advocating their organisation lower rates of absenteeism employee well-being better retention Fewer accidents
Engaged employees generate 43% more revenue (Hay Group) Engaged employees: 2.7 sick days per year Disengaged employees: 6.2 (Gallup) Engaged employees are 87% less likely to leave (Corporate Leadership Council) 67% of engaged advocate their organisations; only 3% of the disengaged do (Gallup) 9 out of 10 of key barriers to successful change, people related (PWC) 59% of EE say work brings out their most creative ideas only 3% of disengaged agree (Gallup)
People and the Bottom Line WF/IES report showed increasing investment in employees by 10 per cent would produce an increase in gross profits per employee of between 1083 and 1568 Other research suggests disengaged workers cost the UK 44 billion a year in lost productivity Stock market performance of Sunday Times 100 best companies was ten times higher between 2000 and 2005 than those for FTSE 100 Gallup 2007 research showed that public companies in the top quartile of employee engagement had EPS growth 2.6 times higher than those below average
Research shows 70% of engaged employees have a good understanding of how to meet customer needs as opposed to only 17% of disengaged employees PwC research shows CEOs identified the availability of people and talent as the top barrier to growth more than downturn or over-regulation. To compete for talent we need to change the way we recruit, motivate and develop people Overwhelming evidence today s workforce wants more out of work job satisfaction more important than traditional factors
Level 1 & Level 2 Engagement LEVEL 1 TRANSACTIONAL; We act on employee feedback through survey Compartmentalised Thinking Territory, Market Sector Strategy STRATEGY FOR: IT; ESTATES; CAPITAL ETC EMPLOYEE / HR STRATEGY Survey & act on it eg Performance management, communications, listened to etc NB: CIPD: 75% of Employee Engagement focused as above Reactive engagement. About discretionary effort LEVEL 2 TRANSFORMATIONAL It is a way of running and doing business WE TRACK PROGRESS OF STRATEGY ONE PAGE : Market Sectors, CA, Country, Positioning Strategy AND Values/Behaviours to deliver it TWO-WAY WE MEASURE: Concerns, commitment, feedback People at heart of delivery and at heart of strategy People help shape strategy People give continual VOICE NB: CIPD: 25% of Employee Engagement focused as above About proactive engagement
So what s the problem A 2007 IPA survey found that most organisations were aware of a need for employee engagement; less than half knew how to implement it Recent research from Kingston University found only 35 per cent of employees actively engaged main factors in disengagement included: way organisation managed, chances for promotion, pay, recognition for good work, attention paid to suggestions, opportunity to use abilities
What matters to employees and what they actually feel Senior management interest in employee wellbeing Improved my skills and capabilities over the past year Reputation of the organisation as a good employer Input into decision making in my department In combination with government programs, benefit programs generally meet my needs Organisation focuses on customer satisfaction My manager inspires enthusiasm for work Salary criteria are fair and consistent Opportunities to learn and develop new skills Employees understand how to satisfy customers *Drivers are shown in descending order of importance. Favourable Mixed Unfavourable Source: Tower Perrin
Our four key enablers Leadership provides a strong strategic narrative giving a line of sight between the job and the organisation s vision Engaging Managers, who offer clarity and training, who treat people as individuals, who listen and encourage and who ensure work is organised efficiently There is employee voice in the organisation, for reinforcing and challenging views; between functions and externally There is organisational integrity : espoused values are reflected in behavioural norms
One key theme Alignment knowing what to do Engagement wanting to do it
The challenge of recession In recession, your people are your best, if not only, competitive advantage Staff know how to cut costs, how to work smarter and more productively Companies need to engage all their employees and all their employees understanding, effort and commitment to get through Engagement provides a means of doing just that The companies that come of the recession best will be those who endorse and embed it But don t take advantage!
Challenge for HR 66 per cent of CEOs believe their HR department and practices are not equipped adequately to deal with new emphasis But HR key to implementing engagement strategies Vital to align employee/industrial relations strategies with engagement Championing of engagement making sure CEOs get it may be way back to the top table
We concluded Exemplar organisations exist over 50 case studies in the report. We just need more of them It s not about: regulations and targets just doing a survey It needs: culture change in organisations leaders interpreting it for their context
Recommendations Government should establish a national awareness campaign, encourage sharing of good practice Government should align considerable resources it spends on workplaces RDAs, UKCES, ACAS etc Practical support, especially for SMEs Task for other stakeholders in employment field TUC, CBI, CIPD, CIM All accepted by government stage two underway
Not rocket science Engagement is a win-win for organisations and equally for their workforce - business case equalled by people case It s the best problem solving mechanism for companies and services in the workplace from strategic decisions to small ones Best way of meeting ever present challenge of constant change Try making change without taking your workforce with you public sector 1997 onwards! Global competition UK high end manufacturing and services need engaged people
ENGAGEMENT ENABLERS OF ENGAGEMENT CENTRAL THEME: ALIGNMENT/ENGAGEMENT THE THREE FOUNDATIONS DEATH OF DEFERENCE LOSS OF TRUST
About the IPA Not-for-profit, registered charity supporting companies and organisations with employee involvement, participation and engagement Provides employee and industrial relations advice and support and training and support on workplace consultation, partnership and representation Extensive client list and good practice networks Provides guidance to Government on Information & Consultation and partnership issues Nita Clarke, former political adviser to PM Tony Blair, senior union official, and co-author of MacLeod Review www.ipa-involve.com Macleod Review download: Employee.engagement@bis.gsi.gov.uk